RD Sets Aside 1.2 Lakh Penalty Levied by ROC for Violating Secretarial Standards u/s 118(10)

The Regional Director has recently cancelled the Registrar of Companies (ROC) Penalty Levied for not following the Secretarial Standards under section 118(10)

The company, Stanley Lifestyle Limited, along with its managing director, whole-time director,  and one ex-Company Secretary, was penalised by the Registrar of Companies (ROC), Bangalore, for violating Section 118(10) of the Companies Act, 2013. Section 118(10) requires all companies to follow the secretarial standards regarding the board meetings prescribed by the Institute of Company Secretaries of India (ICSI). Secretarial standards are policies that cover areas like board meetings, general meetings, maintenance of records, etc.

Under these standards, companies are required to disclose the number and dates of meetings of the Board and committees scheduled and the number of meetings attended by each director during the financial year. As per ROC, the company failed to disclose the dates of Board Meetings in the Director’s Reports for the financial years 2018-19, 2019-20, and 2020-21, which is required under SS-1. This resulted in imposing a penalty of Rs 1,20,000.

However, the authorised representative submitted that the Secretarial Standards were already revised in 2017, where the need to disclose the number and dates of meetings of the Board and committees scheduled by the company was removed. The company claimed that it used the updated SS and did not disclose the required information.

The RD observed that the SS-1 was updated, removing the need to disclose the dates of the meetings. This means that the company did not violate Section 118(10) of the Companies Act, 2013. Therefore, RD set aside the penalty order of Rs 1.2 Lakh.